Wednesday, November 18, 2009

The Great American SELF-STORAGE LOCKER

Above- the Great American Self-Storage Locker can be a useful thing to some folks, but a huge money-waster to most.

In the early 1980's self-storage facilities started springing up all across America like dandelions after a rainstorm. I only wished I was smart enough to build and own one of these money-makers. What caused this trend to occur? What are people storing? And why?

The self-storage locker can be a financial trap for many folks, slowly bleeding them dry, one credit card charge at a time. If you can, avoid using a self-storage locker entirely. Oftentimes it is better to sell things than pay to store them.

As I have noted an earlier post, money is one of the greatest inventions of all time. You can sell things and convert them into money, which is portable, compact, and can be stored easily (and set to work earning interest) and then later on re-converted back into the item you sold. It is as magic as Captain Kirk's transporter beam. A used car can be converted to money, moved halfway across the planet, and then re-converted into another used car. Magic!

Going overseas for a year or two? Rather that pay money to store your 1995 Ford, sell it, put the money in the bank, and when you get back, you'll have enough dough to buy a 1997 Ford in better shape than the car you sold. If you store the car, you pay hundreds and hundreds in storage fees and end up with an old depreciated car. Yet many people do the latter, thinking they are "saving money" by keeping the old car around.

I've talked with owners and workers at these storage locker places and I've asked them what people store in these things. "Crap, mostly" they say. When the renter doesn't pay his storage fees, the things they pull out of there are pretty pathetic. Most of it ends up in the dumpster. Yes, it is true, people pay money to store their garbage.

The storage locker is a trap, because once you have one, you become tempted to store more and more things there, on the premise that "Well, I already have the storage locker, I might as well use it". Once the locker is full, trying to empty it and get out from under the monthly storage fees is a difficult and daunting challenge, as it may take weeks or months to sell or dispose of all the stuff inside.

Let me give you a personal story that illustrates this point.

When I closed my office in Alexandria Virginia and decided to "go solo" I had several desks, chairs, and other office furniture and supplies that I had to move out, in order to rent the space. What I should have done is had garage-type sale and sold it all for whatever little I could get for it. THAT would have been the smart move.

Instead, I spent several back-breaking days moving all this stuff into a storage locker, which cost nearly $200 a month, plus a security deposit. Some of the items were damaged in transit. Then I forgot about it for months at a time.

Months later, I had some stuff taking up space in my house. Rather than selling it or throwing it away, I thought "Well, I'll put it in the storage locker!" and went off to load up the cubicle even more. Pretty soon, the storage locker was full to the top with stuff. And my credit card kept getting dinged to the tune of $199 a month.

A year later, I realized that I had spend over $2000 in storage fees for little or no apparent reason. I had no bona fide intent to use these desks and other things in the future. Moreover, the cost of the storage fees was starting to exceed the value of the items stored. I put an ad in the paper and over the next two months slowly sold off the office furniture. When it was all said and done, the amount I realized from the sale of the furniture was about equal to the storage fees I had paid over the preceding 12 months.

In other words, I would have been better off just throwing the stuff away or giving it away. Or, better yet, if I sold the desks for $50 each, someone would have done the backbreaking job of hauling it all away for me, and I would have made several hundred dollars. Lesson learned.

I was lucky. I know others who have not one, but several storage lockers full of stuff, that they have been paying rent on for several years (7 or more). The amount of money spent on storage, over time, is staggering. Thousands and thousands of dollars. Enough to buy a car. When I ask them what they have in these storage lockers, they sigh and say "I don't really know". Not having the time to "clean out" the storage locker, they continue to pay and pay. Eventually, they will stop paying and the manager will sell their goods at a monthly auction for a pittance.

Don't get me wrong, there are constructive uses for storage lockers. If you run a small business, a storage locker can be a lot cheaper than warehouse space - and more flexible as well. I bought a hot tub once from a lady who sold them online, using three adjacent storage lockers as her "warehouse". If you run a landscaping business and live in an apartment, a storage locker can store your trailer with all the lawn service equipment. If you are a carpenter, you can store your tools there and run a business, even if you do not have space at home. Many businesses can be run successfully out of a storage locker, with low overhead.

If you are storing an item seasonally, such as a boat or RV, a storage locker can be an inexpensive and cleaner alternative to a barn or shed. We keep our small travel trailer in an $88 a month locker for six months of the year. We do, however, use that trailer, for at least a month every year. And we rent the locker for only six months of the year.

How can you avoid trouble with a storage locker? Here are some tips I have learned:

1. Have a definite plan or goal for use, which includes a maximum time period: If you are moving and putting things "temporarily" in a storage locker, consider how long you should store things before it becomes too much. If you find yourself paying rental fees after a year, consider it time to sell. Have a rational plan for why you are storing things and set a maximum time period (less than a year, preferably) and then unload the stuff if your plans change, rather than hang onto things out of pride.

2. Avoid the temptation to add things: If you put your classic car in the storage locker for the winter, avoid the temptation to add boxes of old china and junk just because you have the locker. Once the locker is full, you'll find it hard to unload it, and you may end up not using your classic car next summer! Many storage lockers take on this look, chinked to the rafters with stuff, to the point that the owner no longer is aware what is inside the locker. Saving things and paying rent to save them makes no sense. Don't add to the locker, or you'll find it nearly impossible to clean it out later on.

3. Consider SELLING your stuff instead: One storage locker manager told me that her biggest customers were people going to jail. Oftentimes, they had no place to leave their "stuff" and instead of selling it off (and perhaps paying their lawyer?) they would store junk furniture and old cars, paying hundreds of dollars a month. Saving an old car for two to three years makes no sense at all, as it will depreciate in value over that time AND you are paying to store it. Plus, cars hate to sit, and you will likely have mechanical problems once you take it out of storage. There is very little that is worth "saving" for such long periods of time, even classic cars, antiques, or collectibles. Liquidate it and buy it back later on. Chances are, later on, you may decide you don't want that item (or its equivalent) back anyway. If faced with the choice of buying the junk they already have, most people would take a pass.

4. Ask yourself if you are developing HOARDING DISORDER: See my article on the subject. Storage lockers allow closet hoarders to hide their affliction. They save junk in the storage locker on the premise that it is "worth something" when in reality it is junk, worth far less than the storage fees. If you have a storage locker full of things you have not visited in months, and are paying fees for stuff for years, ask yourself why - and whether you are developing this debilitating disorder. Hoarding Disorder is one of the hardest mental illnesses to treat, as most afflicted by it do not think they have a problem. The storage locker industry is all to happy to cater to those with this illness. Get Help.

Storage lockers have proliferated across America, and like everything else that is "popular", it is generally a bad idea. Just because your friends and neighbors have storage lockers full of junk does not make it a sound financial proposition. Sell the junk, convert it to capital, and get rid of the monthly expense of storage. If it is in storage for months at a time, you aren't using it. And if you aren't using it, why own it?